House Rent Allowance (HRA) taxability and working/calculation of taxable HRA
Dec 8, 2009 Income Tax
Employees generally receive a house rent allowance (HRA) from their employers. This is a part of the salary package, in accordance with the terms and conditions of employment. HRA is given to meet the cost of a rented house taken by the employee for his stay.The Income Tax Act allows for deduction in respect of the HRA paid to employees. The exemption on HRA is covered under Section 10(13A) of the Income Tax Act and Rule 2A of the Income Tax Rules. It is to be noted that the entire HRA is not deductible. HRA is an allowance and is subject to income tax.
An employee can claim exemption on his HRA under the Income Tax Act if he stays in a rented house and is in receipt of HRA from his employer. In order to claim the deduction, an employee must actually pay rent for the house which he occupies.
The rented premises must not be owned by him. In case one stays in an own house, nothing is deductible and the entire amount of HRA received is subject to tax. As long as the rented house is not owned by the assessee, the exemption of HRA will be available up to the the minimum of the following three options:
- Actual house rent allowance received from your employer
- Actual house rent paid by you minus 10% of your basic salary
- 50% of your basic salary if you live in a metro or 40% of your basic salary if you live in a non-metro
This minimum of above is allowed as income tax exemption on house rent allowance.
Salary here means basic salary which includes dearness allowance if the terms of employment provide for it, and commission based on a fixed percentage of turnover achieved by the employee. The deduction will be available only for the period during which the rented house is occupied by the employee and not for any period after that.
Meaning of Salary for calculation the exemption of HRA
- Salary means (Basic + D.A + Commission based on fixed percentage on turnover).
- Salary is to be taken on due basis in respect of the period during which the period accommodation is occupied by the employee in the previous year.
Examples for calculation of exemption/deduction of HRA
X has received following amount during the previous year.
- Basic Salary – Rs. (5000*12) – Rs. 60,000/-
- Dearness Allowance (D.A) – Rs. (1000*12) – Rs. 12000/-
- House Rent Allowance (H.R.A.) – Rs. (2000*12) – Rs. 24000/-
- Actual Rent Paid – Rs.(2000*12) – Rs. 24000/-
Calculation
The minimum of the following amount shall be exempt
- Actual HRA received (2000*12) – Rs. 24000/-
- Rent Paid in excess of 10% of salary ( 24000-7200) – Rs. 16800
- 40% of Salary – Rs. 28800/-
Therefore, Rs. 16800 shall be exempt and the balance Rs. 7200 shall be included in gross salary.
Tags: conditions of employment, HRA, income tax act, income tax rules, premises, receipt, relevant period, relevant rules, rented accommodation, salary package, terms and conditions of employment, terms of employment, turnover
December 14th, 2009 at 11:36 am
good for knowledge
December 29th, 2009 at 8:21 am
many gramatical mistakes in the 4th and 7th paragraphs which made the entire article really difficult to understand
January 15th, 2010 at 5:11 pm
Is PAN details of landlord compulsory for claiming HRA ?
January 15th, 2010 at 8:11 pm
No. But if Income tax department take your case for scrutiny then he may ask for the same.
February 17th, 2010 at 6:39 am
I am a central govt employee. I have two queries :-
(1) I have received HRA dues for the period Jul-Mar 2008 in the FY 2009-10. I have also received HRA for the period Apr-Oct 09 in the same FY year. My query is whether I can claim exemption of HRA for both the periods in the IT Return for the AY 2010-11? ( I believe I should be doing so because I have received the dues in the current FY, but a confirmation from your side would be welcome)
(2) I would like to know at which para/place in the ITR-1 Form do we need to mention the HRA exempt income and secondly are the details of the calculation of HRA exempt income, to be attached as a separate sheet to the ITR. If so is there a particular format for the same? I have calculated the details month wise because of change in basic pay and D.A. during the year.
Thanks in anticipation.
February 20th, 2010 at 8:06 am
what would happen to a person who has purchased the house/ property on loan? He is not the owner of the house at present as it is mortguaged to the bank. He is paying monthly EMI. (The house is self occupiedby him)?
February 23rd, 2010 at 4:26 am
The person can claim the interest on loan as deduction u/s 24 (upto a maximum of Rs. 150,000/-) from the income from House property . Secondly, the repayment of principal amount of loan can be claimed as deduction u/s 80C of the Income Tax Act.
February 26th, 2010 at 12:14 pm
I have a query :-
In case a person occupies two rented accmodations, one at the place where he is employed say at Haridwar and another at place where his/her family is residing say at Delhi & where he/she visits periodically, whether the entire rent paid is eligible for calculating HRA exemption. Any case law or circular on this issue.
February 27th, 2010 at 7:05 am
it is an excellent website for gaining the knowledge. especially to the students
March 2nd, 2010 at 5:31 pm
I Have purchased a plot and paid a stamp duty in 2009… no home loan taken…. currently living on rent and doing construction on plot…
CAn I claim HRA deduction & stamp duty benfir under section 80C….
March 4th, 2010 at 2:51 pm
Can u please tell me how the “10%” (in case of HRA) is fixed by the department i.e. on what basis?
March 10th, 2010 at 5:59 pm
Can i pay the rent to my wife. the house is in her name. whether the claim of rebate will be legal.
March 20th, 2010 at 3:02 pm
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March 21st, 2010 at 2:46 pm
I want to know whether deduction under this head is applicable if HRA is not paid seperately.
March 27th, 2010 at 2:28 pm
i have a quer about some shares transcations…
i have purchased shares of gtl infra ltd. and shown as closing stock as on 31.03.2009 (as business ead applies in shares) and in june 2009 i got 60 bonus shares.
so i want to know that these bonus shares are part of my investment (say capital gain / loss head applies) or it will be added in my stock qty. with nil value of bonus shares.
PLEASE REPLY ME SOON..
I M VERY THANKFUL TO YUO ALL.
March 27th, 2010 at 2:48 pm
I am receiving house rent allowance and am not paying any house rent since I reside with my parents. Kindly let me know the Tax aspect on the HRA received by me.
April 3rd, 2010 at 3:03 pm
Can employee claim exemption of hra if he is staying in a hotel and produce hotel bills for exemption
April 10th, 2010 at 3:23 pm
hi
i have a query my client is receiving hra of rs 66999 p.a and he is paying rent of rs 9000 to his father the house in which he stay is of his father here can he claim exemption for that u/s 10(13a) or he should go for deductation of rent paid u/s 80
May 1st, 2010 at 12:27 pm
hello, i have a query:-
if any employee receive HRA from his employer,is it essential to submit the rent receipts by employee to his employer for claiming exemption for HRA u/s 10 of i.tax.?
May 20th, 2010 at 10:30 am
a person live in uttrakhand how much deduction can he take from HRA
May 21st, 2010 at 9:58 am
HRA calculation/exemption
My break up of monthly salary is Basic 29400 HRA 11760 Others 15300. In the previous year I was on unpaid medical leave for about 4 months and did not get any salary during this period. But I had to pay my rent for the full year for the house where I stay which is Rs 9500 per month. Can I claim exemption for the full year or what amount is eligible for exemption.
You can reply on my email also.
Regards,
Natarajan
July 17th, 2010 at 12:05 am
1- I HAD FILED MY ITR II FOR FINANCIAL YEAR 2008-2009 ON 30/07/09 AND I WAS TO GET RFUND BECAUSE OF MY HOME LOAN AND RELIEF U/S-89 BUT I HAVE NOT RECEIVED REFUND TILL NOW AND IF I FILE REVISED ITR II FOR THE SAME THEN WHICH FINANCIAL I HAVE SELECT AND WHAT ABOUT THE INCOME FIGURES ,WILL IT SAME AS IN ORIGINAL ITR OF 2008-2009.
2- I DID NOT DECLARE MY HRA TO MY EMPLOYER IN 2009-2010,NOW I WANT SHOW ALONG WITH ITR THEN WHERE TO ADJUST HRA FIGURE IN INCOME.
July 17th, 2010 at 12:06 am
I am a central govt employee. I have two queries :-
(1) I have received HRA dues for the period Jul-Mar 2008 in the FY 2009-10. I have also received HRA for the period Apr-Oct 09 in the same FY year. My query is whether I can claim exemption of HRA for both the periods in the IT Return for the AY 2010-11? ( I believe I should be doing so because I have received the dues in the current FY, but a confirmation from your side would be welcome)
(2) I would like to know at which para/place in the ITR-1 Form do we need to mention the HRA exempt income and secondly are the details of the calculation of HRA exempt income, to be attached as a separate sheet to the ITR. If so is there a particular format for the same? I have calculated the details month wise because of change in basic pay and D.A. during the year.
Thanks in antic
Read more: http://www.taxguru.in/income-tax/house-rent-allowance-hra-taxability-and-workingcalculation-of-taxable-hra.html#ixzz0ts72F9fu
July 29th, 2010 at 11:48 am
My income is under the tax exemption limit. So when I am filling the ITR-1 form, in section 23, do I need to fill the employers details if there isn’t any TDS deducted from my salary ? So in that case if my form there won’t be any information of my employer, so will that do ?